In a recent interview with Joystiq, Penny Arcade's Mike Krahulik revealed that Hothead Games will not be making a third episode in the Penny Arcade Adventures series. Citing Hothead's current focus on DeathSpank, Krahulik said the storyline of the game episodes will be concluded on Penny Arcade's site in the form of episodic fiction.

"There won't be an Episode 3," Penny Arcade's Mike Krahulik told Joystiq this morning. "We're actually not making a third episode of the game." Penny Arcade Adventures was originally unveiled at PAX 2007 in Seattle as a four-part episodic series, marking the webcomic duo's first foray into video game creation, as opposed to video game critique. With the first two episodes following in fairly rapid succession – Episode 1 was released in May 2008 with Episode 2 following just five months later in October 2008 – the prolonged absence of Episode 3 has been notable. Coupled with the news that Episode 2 only earned "one-third the sales of Episode 1," things didn't look promising for the series.

"[The game's developer] Hothead has DeathSpank and they have a chance to do something really cool with it," Jerry Holkins, the other half of the duo, said. "And they need to have an opportunity to make it incredible." With a recently announced EA Partners ... uh, partnership, DeathSpank certainly has some weight behind it. But why not create both titles? Holkins says, "They definitely could've done both games. I think they could've made DeathSpank and Episode 3 but I think Episode 3 would've suffered. I mean, I know it would have suffered. So we'd rather not do it than do it half-assed and so we're going to finish that story but it's going to be on our website."

"Right now my focus is on trying to create an episodic story-based version of the remaining games. It's going to be like a book that comes out," Holkins explained, comparing it to Dickens' illustrated episodic classic, The Pickwick Papers. "According to the traditional model of episodic fiction." Asked if the first two Episodes that did make it into video game form would be included in this episodic story, Holkins said, "I'd like to write them out, that'd be great. I hadn't considered that ... I fully intend for these episodes to include flashbacks and things of that nature."